this worked for me but in return i lost service so i am going to restore rejailbreak and try something else and i'll post my findings.
Okay, what i tried worked.

i got my youtube and service on 1.1.4 after ziphone jailbreak.
Here's what i did:
1. With a fresh restore, I opened ziphone 2.5, jailbreak and all that business.
2. Opened installer and installed BSD, OpenSSH and NOTHING ELSE.
3. Restarted the phone and connected to the phone via winscp
4. navigated to /var/root/library/lockdown
5. replaced the old files with the 3 files you can download from this link:
http://soundsgood.cocolog-nifty.com/...es/youtube.zip
6: restarted iphone. I DID NOT DELETE ANYTHING FROM THE activation_records FOLDER!
7: after restart, i then deleted everything inside the activation_records folder and restarted again
8: connected to itunes and my phone was re-activated automatically with youtube working!